Executive Summary

Last fall, the CFP Board formally announced its new Center for Financial Planning, a designated subsection of the CFP Board itself intended to help advance the financial planning profession. It’s stated vision was to become “the premier resource in the financial planning profession for educators, researchers, practitioners, financial services firms, and the public”, with a particular focus on cultivating the next generation of financial planners, enhancing gender and racial diversity amongst CFP certificants, and becoming an academic home for the financial planning body of knowledge.

From a financial perspective, the Center for Financial Planning was originally announced as being funded primarily from the CFP Board’s own operating budget, by outside sponsors (including a lead sponsorship from TD Ameritrade), and through the opportunity for CFP certificants to voluntarily donate. However, the CFP Board has recently begun “testing” a new CFP renewal process, defaulting every CFP certificant into a $25/year donation that amounts to a 14% increase in certification fees and “voluntary” organizational dues, or nearly $2M/year of new revenue for fund the CFP Board’s ever-expanding initiatives!

Although the Center for Financial Planning’s new initiatives themselves are laudable, the massive push by the CFP Board and its new internal entity for new revenue seems to put it on an ever-accelerating collision course with the Financial Planning Association, as their overlapping initiatives grow ever more redundant, and both organizations increasingly ask CFP certificants to foot the (redundant) bill.

Yet ironically, even as the CFP Board converges on the functions of a membership association and a certifying body, the reality is that the entire origin of the CFP Board was a spin-off from an educational institution (the College for Financial Planning) in the 1980s, in large part due to the fundamental conflict of interest that exists when the certifying organization also serves as an educator of its certificants and competes with the CE sponsors it oversees. Which means either the CFP Board has managed to entirely forget the roots from whence it came… or perhaps that it is continuing to groom the Center for Financial Planning as a spin-off membership association precisely because the leadership believe it is a way to work around the CFP Board’s troubled past?

CFP Board Defaults All Certificants Into $25 “Donation” For Its New Center

In recent weeks, though, reports have started to come in to the Nerd’s Eye View that the CFP Board has nudged their certification renewal fee higher, to $350/year instead. The $25 increase is being reported as a “voluntary, tax-deductible donation” to its new CFP Board Center for Financial Planning.

Notably, though, in what is now being characterized by the CFP Board as a “test”, certificants weren’t merely being given the option to add a donation to their certification renewal fee by checking a box to contribute. Instead, they were defaulted into the payment and automatically assessed a $350 total renewal fee when they get ready for the final Check-Out payment stage of renewing.

As the image to the right reveals with careful reading, there is a one-word link buried in the 5th line of the paragraph that indicates how to opt out of the “donation”. As we know, though, defaulting people in, and including an opt-out buried in the fine print, means that virtually no one will opt out, and most probably won’t even realize an extra assessment is being applied against them. Especially since there’s no clear check-box to check (or uncheck) to choose (or avoid) the “voluntary” donation.

And while it might seem minor, the ramifications of defaulting the entire base of CFP certificants into an extra $25/year assessment is significant. By the CFP Board’s latest demographics headcount, there are now almost 75,000 CFP certificants. So charging an extra $25 per person is a whopping $1.8 million in extra annual revenue!

In turn, the reality is that $1.8M of extra revenue is a massive potential increase in the size of the CFP Board, given that its core operations run on only $180/year certification fees (since the other $145/year is for the public awareness campaign). Or viewed another way, the CFP Board is now “testing” the equivalent of a 14% increase in renewal fees to fund the organization, without asking (or barely even telling) anyone.

What Is The Purpose Of The CFP Board’s Center for Financial Planning?

The fact that the CFP Board’s Center for Financial Planning has gone, nearly overnight, to an organization with multi-million dollar sponsors and nearly $2M of annually recurring “voluntary donation” dues raises the question once again of what the purpose of the Center really is, and what all this revenue is intended to fund.

“The Center will build capacity for the financial planning profession by creating a sustainable supply of new and more diverse advisors to replace the retiring workforce, and by building an academic home to create a respected body of knowledge and support highly qualified faculty who will deliver job-ready financial planners from top colleges and universities.”

All of which raises the question: at what point are the CFP Board’s efforts redundant to the FPA? Is it really necessary for the CFP Board to try to do what the FPA is already doing? Especially now that we as CFP certificants are being pushed to pay for these initiatives twice, once to the FPA through membership does, and then again by being defaulted into a $25/year dues-like structure from the CFP Board? Is it really healthy for both organizations to be pursuing these initiatives at the same time? Or a sign that one organization or the other is failing to do its part, forcing the other to try to pick up the slack?

Still, it’s arguably a sign of organizational mission creep for the CFP Board to be spending dollars and effort on building their pipeline of CFP certificants in the first place. It may be good growth business for the CFP Board, and certainly some organization needs to support the effort to attract future financial planners into the profession, but is it really part of the CFP Board’s core Mission?

The mission of Certified Financial Planner Board of Standards, Inc. (CFP Board) is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.

As the CFP Board’s mission reveals, it is meant to be the holder of the CFP marks and to uphold them as the standard of excellence. It was created to be the certifying body, not necessarily to do the self-interested ‘work’ of further growing its ranks, pushing for more racial and gender diversity in who holds the marks, or providing an academic home to the faculty who do financial planning research, or do whatever else the Center for Financial Planning’s “Design Summit” may suggest for the future. The mere fact that those are important things to be done for the profession does not mean it’s the CFP Board’s work to do.

In turn, perhaps the reason the CFP Board is trying to generate dues for the Center for Financial Planning through “voluntary, tax-deductible” contributions in the first place is because it already recognizes that trying to drive such an effort through its core certification fees revenue is so far off its core mission that it could threaten its 501(c)(3) status as unrelated business taxable income?

Is The CFP Board’s Mission Creep Driving The Center To Become A Membership Association?

Notably, the real concern over the CFP Board’s increasingly aggressive mission creep through its Center for Financial Planning is not merely its current initiatives, but where it goes from here.

After all, if the CFP Board can successfully layer on a $25 “voluntary contribution” dues payment for the Center for Financial Planning now, and quickly rack up nearly $2M of operating revenue, what’s to stop the organization from increasing its default “donation” to $30, $40 or $50 in another year or two? At what point is it an outright abuse of the CFP Board’s power to take 75,000+ CFP certificants who pay for the organization’s “core mission” and default them into millions of dollars of revenue for other off-mission purposes (however laudable they might be for some organization to do)?

Given the scope of the event, already bringing together Registered Program directors and Academic researchers, the CFP Board’s expansionary efforts raise the question of whether it will soon invite CFP practitioners to the event as well, to see the latest research, and perhaps earn from CFP CE credits. From there, a few practice management sessions might be included as well – to better bolster participation from CFP practitioners. Which in turn will attract more sponsors. The potential end result: in another year or few, might the CFP Board’s Center for Financial Planning start running its own National conference, in direct competition to the FPA (and NAPFA) national conferences as well?

And with an ever-expanding Center for Financial Planning building out the “academic home” for the financial planning body of knowledge, there’s also the question of whether it’s only a matter of time before the CFP Board tries to reinstitute its ill-fated attempt to become a direct CFP CE provider. After all, the CFP Board has already begun to expand the description of its “academic home” initiative for the Center to include “building a world-class repository to house, catalogue, and deliver financial planning knowledge”. In other words, the Center for Financial Planning already seems to be positioning itself to be the CFP CE delivery vehicle the CFP Board tried and failed to be itself.

With the FPA’s declining reach, fulfilling the functions of a (competing) membership association is becoming a bigger and bigger business opportunity for the CFP Board. And one for which the organization has a distinct marketing advantage… because it controls and owns the list of CFP certificants who might be interested in attending for those CFP CE credits!

And ironically, the concerns of the CFP Board (or its Center for Financial Planning subsidiary) going into competition with membership associations to teach and train CFP certificants and offer CE credits isn’t merely a theoretical concern… because in reality the entire origin of the CFP Board was a spin-off from an educational organization after conflicts over being the sole organization that could grant the marks (and that the educational institution, the College for Financial Planning, didn’t want to be responsible for the enforcement of professional standards against its former students).

In other words, the whole reason that the CFP Board (then the International Board of Standards and Practices for Certified Financial Planners) exists as a standalone entity from where it originated (in the College for Financial Planning) was because it’s a necessary and crucial separation for a fundamental conflict of interest. Which suggests that the CFP Board would be well served to remember its roots when it comes to the importance of keeping the certification and enforcement body separate from the organization that teaches and trains CFP certificants. Unless, of course, managing the conflict through a potential spin-off organization is the whole reason the CFP Board is gearing up a separate Center for Financial Planning in the first place?

At a minimum, though, if the CFP Board really wants to expand its revenue base by extracting more dollars from CFP certificants to fund its expanded efforts, it should formally propose an increase in certification fees, and make the public case to CFP certificants for why we should pay for its (redundant) efforts as a part of the core operations of the organization. Because not telling anyone it’s conducting a “test” and just defaulting certificants into a “voluntary” charitable contribution that amounts to a 14% fee increase just makes the organization look like it has something to hide.

So what do you think? Are the CFP Board’s efforts through the Center for Financial Planning redundant? Should they be left to the FPA? Or is the FPA redundant and would it be better for CFP certificants to just pay the CFP Board to fulfill both certification and membership association functions?

Related

TL;DR
An opt out donation default will raise more money than an opt in donation default.

I see this as a presumed consent strategy for Center for Financial Planning fundraising.

By setting their renewal form defaults accordingly, CFP Board presumes that CFP certificants are consenting donors to the Center for Financial Planning unless they act to register their unwillingness, e.g. they act to opt out of the $25 donation.

It seems that the very body we count on to uphold ethics and integrity is using a morally conflicting tactic to raise money. It certainly raises my eyebrow. While I am sure the semi-voluntary donation was set up with good intention it is a distasteful way of getting funds. As a payer of both CFP and FPA dues I am already disgusted with the amount of combined funds I pay on an annual basis. I will be opting out on my next renewal.

David Mendels

It is, indeed, a particularly sleazy way for them to go about raising revenue and providing an “indicator of support” for a highly questionable project. WE are entitled to expect better of them.

Byrke,
Indeed, there is no small amount of irony that the CFP Board just finished leading a charge in support of adopting fiduciary rules to minimize conflicts of interest, and then adopted a fundraising approach that is the very essence of being conflicted. :/
– Michael

DENISE WILCOX

FPA dues have grown to a point where I will consider dropping my membership and now the CFP Board wants to push us into contributing to their bottom line. Enough already! I will absolutely opt out of the CFP additional cost. We pay too much as it is. Thanks for the heads-up.

The fact that they made it take a phone call and an impediment to CFP certificants who didn’t want to contribute already makes the point, though… :/

Bob Crane

Since the FPA now gives equal standing of membership to insurance agents, without any higher certifications, I have withdrawn my membership support for the FPA.

Ed Gjertsen

Bob – interesting observation because I don’t think that is the case. https://membership.onefpa.org/ By the way, the financial planning profession was founded by, among others, members of MDRT back in the late ’60’s. Darn insurance agents, what were they thinking…

Bob Crane

Well Ed the business of financial education, investment and financial and estate planning has evolved since back in the day. MDRT was a good start coupled with the CLU and ChFC from the American College.(yes I have those with my CFP). In my opinion, in today’s complex environment of taxes, financial products, complex life insurance instruments and the ever-changing global economy a life insurance agent, Without higher levels of certifications or degrees does not have the level of education needed call themselves a financial planner.

K. Lane Mullinax

Could not agree more Bob … I hope once the sensationalism dies down … people will start to reflect on the core issue here … the need for higher standards, certification and a professional association for CFPs. The reason I just spent five years in law school getting my law degree, and two years before that getting the MBA with a finance specialization, was to to be a better planner. … FPA is NOT the answer. … NAPFA got close, but what we really need is something akin to the bar (the regulatory bar in each sate regulates attorneys, by the way). There is no reason that the CFP board, the Center, or some other “arm” of the board cannot be the membership association and continue to escalate us, and help us help ourselves, to become the profession that we ALMOST are. Maybe state boards – implemented by the CFP board – are the answer for certification (that’s what we see with accountancy, law and medicine), with the national Board providing the academic research facilitation and association aspects. Think ABA, AMA and AICPA. …

Bob,
Not sure where you’re basing this comment – the FPA has a different membership status for CFP certificants vs ‘other’ financial planning professionals (which used to be their ‘affiliated professionals’ category, but they broadened it). An insurance agent goes into the non-CFP category if they’re a non-CFP, which limits them from access to things like PlannerSearch and media inquiries. I would consider that a meaningful distinction.

Granted, I don’t love everything the FPA has done with this distinction, including changing the name from “affiliated professionals” in the first place, which seems an effort to pander to non-CFP “financial planning professionals”. And problematically confuses actual CFP certificants like you, who become rightly uncertain about where the FPA actually stands on this when it continues to equivocate.

Still, the OVERWHELMING majority of FPA financial planners are CFPs – their non-CFP financial planner ranks have naturally winnowed to almost nothing – and at the least, it’s worth recognizing that they DO make a distinction between the types. The labels are fuzzy, but it’s definitely not “equal standing” as you suggest.
– Michael

Bob Crane

Agreed I shouldn’t use a different terminology. I just believe the financial planning association should be for certified financial planner’s and those of equal academic distinction. I’m so tired of dealing with life insurance agents that call themselves financial planners and have less knowledge about the subject than an undergrad with a basic business degree.

Ed Gjertsen

Thanks for the back up Michael! It’s a shame (Bob) you left FPA because that is what we are fighting for. The DOL Conflict of Interest rule includes those folks you mentioned when they make sales in IRA’s. We have to start somewhere. That is not lost on the FPA and its members. Given FPA is compensation neutral, we provided a voice of reason when speaking in front of congressional hearings and the DOL.

Though I’m sure you can appreciate Bob’s “confusion” when the FPA creates two membership categories called “CFP Professionals” and “Financial Planning Professionals”. Is the FPA really trying to imply that a CFP professional is NOT a financial planning professional, such that we need two categories??

If the FPA is going to back “One Profession, One Designation” as it claims, why does the organization go out its way to relabel the Allied Professionals category to specifically call non-CFPs “Financial Planning Professionals”, too?
– Michael

Ed Gjertsen

Financial planning is a multidisciplinary process involving CFP’s, accountants, attorneys, insurance professionals, etc. The Financial Planning Association is CFP centric, not exclusive. For example, FPA has an Estate Planning Knowledge Circle co-hosted by an attorney who is a member of FPA and obviously not in the CFP category. Hope this helps in the “Allied Professionals” category

FPA had an Allied Professionals category. It worked fine, and signified the EXACT relationship you already highlighted. This does nothing to explain why a category that, for years, was named “Allied Professionals” was suddenly RENAMED into “Financial Planning Professionals”, creating the immediate and obvious confusion between “CFP Professionals” and “Financial Planning Professionals” that prompted Bob’s original comment.

When I join the state bar association as someone who works with an attorney, I’m not called a “legal professional”. When I join the AICPA as a non-accountant who works with accountants, I’m not called an “accounting professional”. So why is it when an allied professional joins the Financial Planning Association, they’re called a “Financial Planning Professional”?
– Michael

Byrke Sestok, CFP

Just hopping in on one of these Ed. Ultimately what we CFPs and other significantly higher educated and trained professionals want is a body that screens its members for ethics and competence. My parent company is an insurance company and I definitely hold myself to a much higher standard than the insurance salesmen that work in my same locale. Everyone has a right to earn a living as they choose and I have no disdain for those who do not operate under the CFP Code of Conduct, however when I pay dues to any organization basing themselves on ‘financial planning’ I expect that ALL the associated members have an elevated awareness of ethics and higher education. Higher education to me means designations that require more than cramming for an exam the night before or ones purely designed to put letters an the end of a name to enhance sales. Most of us know which designations required hard work and education vs. postscript lettering. The FPA is leaking a bit. I’m aware that capital drives an organization. Swing too much toward loose entry and risk losing the professionals who truly rep the organization. Swing too much toward tight entry and risk capital and cash flow. I do not have a solution for you. I know what I would do but I always put my standards ahead of cash flow and sometimes that is a detriment.

Finally, including the MDRT in any conversation as a base of credibility is comical. It’s criteria of attendance is purely a sales number and a check payable. Yes back in the day it was a good start, but the MDRT is irrelevant now.

Big Bopper

Does the American Bar Association have a category for private detectives? Does the American Medical Association have a category for drug reps? Of course not. This is absurd.

William S. Bivin CFP

Don’t forget this new body, designed to provide a stream of new certified talent, is also charging it’s CFP Certificants for referrals from the service! Balderdash! Follow the money!

Chip Hymiller

They also charge a pretty hefty fee in my opinion for companies to list job openings on the CFP job board. When it comes to advancing the profession, providing a free place to list job openings for employers seeking CFPs would seem like a natural fit.

Independent

I earned the credential to round out my knowledge of personal financial planning. The continuing education program, while insufficiently rigorous, is a good idea. The $180/year certification fee is within reason.

I do not use the credential as a marketing device to acquire or retain clients. My business model is very different than most who use the credential. The imposition of the $145/year fee for a public awareness campaign may be beneficial to many certificants, but not to me. I did not intend to join a trade association. I wrote to the CFP Board in protest before they put this fee in place.

I have thought about dropping my certification, but the momentum behind the credential and the aspirations of the CFP Board have me concerned that they will someday convince states to require the credential of all who provide financial planning services.

Soliciting donations to fund a Center for Financial Planning appears to be another step away from a focus on education, and a further move toward concentrating control over the profession, conflicts be damned.

Eric Peterson

Michael: I brought to your attention last year, that the FPA was reluctant (refused?!?) to put the “CFP(R)” designation on the name badges we are given at the FPA National Convention. It has been that way for as long as I remember. I was told that I could stop by the CFP(R) booth to get a nice golden banner to stick on my name badge. I was also told that the FPA did not want to appear to “differentiate” the attendees. Let’s see what happens this year. There is a place for “Designation” on the registration form, but I have filled that in in the past…..

James M.

This kind of stuff is precisely why it took me 3 years of waffling before commiting to the CFP just as they increased the courseload to include the capstone amd raised their annual dues to $325. I struggled with paying thousands of dollars and hundreds of hours on something that on its own didn’t help my clients but I acquiesed and commited as it has not having the marks has become a barrier to advancement in the profession. Their use of “donation” denotes charitable intent which ceases to be such when forcibly compelled. This smacks of the CFP Board picking the pockets of its certificants to advance its own increasigly dubious agenda of being the only true path to a career in Financial Planning.

Five

Here in SA, we have Financail Planning Institute (FPI) driving CFP. I have no bad comments, they are great in creating a environment where porper financial planning must be done and not just product selling, its a creat profession and there is a great need to separate product floggers form professional planners. They are also a platform that take on the regulators on behalf of members and other advisers.

Michael you made Investment News with this one! CFP Board is killing the auto opt-in.

K. Lane Mullinax

I agree that this was a terrible mistake, especially when disclosure is such an important part of the process and the standards. The rest of this noise? Don’t buy it for a minute. … I hope, no pray, that they’re encroaching on the FPA … I left FPA the minute the institute crumbled and the FPA started allowing anyone in that would pay the fee…. Attorney’s have the bar, CPA’s have the AICPA. We NEED, and DESERVE (those of us willing to stick to true fiduciary behavior – and the public in general) an advocate. … Don’t jeopardize the closest we may ever come to having that, by pointing fingers…. especially when the only POTENTIAL losses (25 bucks wow) would come to professionals that should know how to read the fine print…. This is piling on, when this organization has done more to legitimize what we do for our clients than any other. … I would encourage some loyalty … quite honestly, simply being smart and exploiting the momentum that CFP board has created for us. … Here’s a note for you, CFP Board. Learn from this mistake, keep doing what you’re doing (creating standards for those of us that should know, for working with those that may not), and continue to promote the only hope we have at becoming a profession.

Marilyn Mohrman-Gillis

We wanted to take this opportunity to respond to Michael Kitces, CFP®’s most recent blog posting related to the CFP Board Center for Financial Planning.

Michael has raised an important concern regarding one of the fundraising methods that CFP Board was testing to encourage voluntary contributions to the newly launched CFP Board Center for Financial Planning. As explained below, we have discontinued that specific test and will reimburse any CFP® professional who may have unintentionally contributed to the Center.

Our Testing: Since the beginning of 2015, CFP Board has been engaged in a multi-level Capital Campaign to raise support for the Center for Financial Planning that includes seeking sponsorship level gifts from firms, leadership gifts from individuals as well as direct contributions from CFP® professionals. As part of our Campaign, we are currently examining the most effective ways to engage CFP® professionals in supporting the Center.

Since the beginning of this year, CFP Board has conducted a series of tests (one opt-in test and two opt-out tests) aimed at providing CFP® professionals with the opportunity to make a voluntary contribution of $25 in connection with their annual certification renewal fee.

One of the opt-out tests (which applied to a small percentage of CFP® professionals) did not display the Center contribution as a separate line, but included the contribution in the renewal fee along with an opportunity for CFP® professionals to opt out of the contribution. Based on feedback we received from CFP® professionals and the Financial Planning Association, we determined that the donation was not sufficiently transparent and the ability to opt out was not sufficiently clear. We have discontinued this test and we will not use this option in any future fundraising.

We are addressing this directly by contacting all CFP® professionals who made a contribution to the Center under this test and offering a full and prompt refund to those who may have contributed to the Center without intending to do so. Going forward, we will work to ensure that any future fundraising efforts meet our objective of facilitating fully voluntary and intentional contributions to the Center.

The Center is Worth Funding: We are also working to make more CFP® professionals aware of and engaged in the work of the Center.

The purpose of the Center is to secure Americans’ financial future by advancing a more diverse, sustainable and competent financial planner workforce. Everyone recognizes the challenges facing the financial planning profession. We have an aging workforce that does not reflect the diversity of the public that it serves and there is a dire shortage of qualified faculty to teach the next generation of financial planners. These and other challenges are larger than any one organization or firm can tackle on its own.

The CFP Board Center for Financial Planning will serve as a catalyst and convener across all segments of the financial planning profession to pursue research-based solutions to advance diversity, workforce development and a recognized body of knowledge to build tomorrow’s financial planner workforce.

The feasibility study we did in support of the launch of the Center and our landmark Design Summit showed that CFP® professionals and thought leaders within and outside the profession are willing to support these goals. We believe that, as more CFP® professionals learn about the Center, they will join us in this grand challenge to build tomorrow’s financial planner workforce to secure Americans’ financial future.